Contents
Market Condition
Company Dynamics
Interesting & Noteworthy Products
Financial Data
Regulatory Compliance

Market Condition

1. According to the National Bureau of Statistics, China’s dairy output from January to March 2023 was 7.68 million tons, with a year-on-year (YoY) increase of 4.6%. The dairy production in March 2023 was 2.69 million tons, up 7.4% YoY.

2. According to the General Administration of Customs of China (GACC), China’s import volume of infant formula milk powder during January to March 2023 was 79,800 tons, with RMB 9.71 billion import value. In March 2023, the import volume and value were 32,528 tons and RMB 4.08 billion, respectively. Netherlands, New Zealand, French, Ireland and Germany were the top 5 countries of origin by import values.

3. In April 2023, the new consumption sector witnessed 41 investment and financing events, a decrease of 44.6% month-on-month and 38.8% YoY, reaching the lowest since January 2022. But there were still 13 and 7 events in the food & beverage and catering industry respectively, account for nearly half of the total.

Company Dynamics

1. Fanta’s design team has decided to remove the classic orange element on its brand logo and add fruit patterns more relevant to product flavours on the packaging to coordinate the product flavour and the visual image of different drinks. The original orange design would easily confuse consumers when it was on the drinks of other tastes with other colours. The brand also expects its logo to indicate that it has products of various tastes, not only the orange flavour.

2. On the eve of World Earth Day, Mizone stated that the brand’s all six factories had achieved carbon neutrality. In the future, every bottle of Mizone consumers purchase will be from carbon-neutrality factories. In order to step forward to the carbon neutrality of the whole value chain, Mizone has also jointly released carbon reduction initiatives with nearly 100 upstream and downstream business partners, empowering the carbon-zero future.

3. The second self-built factory of Land of Promise, an emerging Chinese dairy brand, was announced to have been completed. While the brand’s first factory producing both normal temperature and low temperature dairy products, the factory in Xianning will focus on expanding the brand’s capacity of normal temperature milk product line this year. In addition, this factory will significantly improve the logistic efficiency and market competitiveness of the brand.

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4. Xinjiang Tianrun Dairy Co.,Ltd. planned to acquire 100% equity of Alaer Sunond Airy Co., Ltd. with RMB 326 million in cash. Sunond owns one dairy processing factory as well as eight self-owned and leased pastures, and is the sole qualified enterprise to generate organic milk powder in Xinjiang. The acquirement of Sunond will strengthen Tianrun’s process of milk sources and fluid milk and enable the company to obtain the qualification for milk powder production.

5. Nestlé Health Science announced to introduce Modulen®IBD, a food for special medical purposes through cross border e-commerce. Specialised for children aged 5 and above with Krohn's disease, the product can effectively promote mucosal healing and reduce inflammation to improve children's nutritional status and living quality.

Interesting & Noteworthy Products

1. PepsiCo launched its first “raw” sugar-free cola on the Chinese market. “Raw” refers to the magnification of cola’s refreshing taste. In addition to the taste upgrade, the new product adopt a real liquid cola visual in its exterior design, offering both visual and taste refreshing experience to consumers.

2. Caonianyinli newly rolled out a herbal drink friendly to consumer health. It boils 18 herbs like ginseng, semen ziziphi spinosae, etc. for 8+ hours. The price range is between RMB 6 and 8, targeting at consumers aged 15-35.

3. Milkground unveiled two brand-new products, Cup Cheese and Halloumi Cheese on its product launch in April 2023. The Cup Cheese is designed as a high-end refreshment aiming for urban white-collar workers, which only contains 124 calories per cup. The Halloumi Cheese with a higher melting point is suitable for various types of high-temperature cooking, such as frying, roasting, etc.

4. Greenice, a Chinese brand focusing on the development of dessert with herbal plant as raw materials, rolled out its first rice-based ice cream. This new product made from rice is zero-pigment, zero-essence, zero-preservative, low in sugar and fat, and without cholesterol.

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5. Yili launched two new milk powder products for female and elderly people, respectively. Added with Bloomage Biotech’s patent sodium hyaluronate ULtraHA, every 100g of the female milk powder product contains above 158mg sodium hyaluronate, which is helpful to skin hydration. The elderly milk powder product has zero sucrose and a low glycemic index, which is suitable for elderly people who needs to control sucrose intake.

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Financial Data

Enterprises	Revenue (2023 Q1)	Notes
PepsiCo	USD 17.85 bn	PepsiCo’s net revenue in 2023 Q1 was 17.85 billion dollars, with a YoY increase of 10.2% and an organic growth of 14.3%. The company currently expects to deliver organic growth of 8% in full year 2023, comparing to 6% in the previous year.
Coca Cola	USD 10.98 bn	Coca Cola’s net revenues in 2023 Q1 grew 5% to 10.98 billion dollars and organic revenues grew 12%. Led by the strong performance in Asia Pacific and Latin America, the unit case volume of sparkling soft drinks increased 3%. Driven by the growth in China, India and Australia, the unit case volume in Asia Pacific region rose 10%. The company expects its full year 2023 organic revenue to increase 7% to 8%.
Nestlé	USD 26.52 bn	The sales of Nestlé in 2023 Q1 were 26.52 billion dollars, with a 5.6% YoY growth and 9.3% organic growth. The sales of Zone Greater China in 2023 Q1 were 1.47 billion dollars, with a 3.1% organic growth. The Infant Nutrition segment was the largest growth contributor, fueled by NAN speciality offerings and illuma. The company expects organic sales growth between 6% and 8% in the full year 2023.
Danone	USD 7.67 bn	The net sales of Danone in 2023 Q1 was 7.67 billion dollars, up 11.6% YoY and 10.5% on a like-for-like (LFL) basis, with all category and geography grown. The net sales in China, North Asia and Oceania achieved double-digit growth of 16% in all three categories, namely, Essential Dairy and Plant-based Products, Specialised Nutrition, and Waters. China’s Infant Nutrition showed a strong start of the year led by higher shipments, while Adult and Pediatric Specialties both grew well by double digits. The company currently expects LFL sales growth between 4% and 6% (previously 3% to 5%).
H&H	USD 455.85 m	H&H’s revenue reached 455.85 million dollars in 2023 Q1, increasing 15.7% LFL, bolstered by the Adult Nutrition and Care (ANC) and Pet Nutrition and Care (PNC) segments. The revenue in the Chinese mainland in 2023 Q1 was 323.5 million dollars, up 15.3% LFL, accounting for 71% of the total revenue. The ANC segment in the Chinese mainland saw strong double-digit growth with active sales of Swisse increasing by 96.1% LFL. The PNC saw 13.9% LFL growth, fueled by strong Solid Gold sales. Although the BNC segment revenue declined due to infant milk formula sales falling, its super-premium Biostime IMF outperformed the whole market growth with an increased market share of 12.0%.

Regulatory Compliance

1. On March 28, 2023, GACC published the list of non-compliant food products in February of 2023. A total of 156 batches of imported food from 33 countries/regions were rejected. More details on Chemlinked.

2. On April 19, 2023, China National Center for Food Safety Risk Assessment (CFSA) released the draft of the new version of GB 4806.1-2016 General Safety Requirements for Food Contact Materials and Articles, which is the most fundamental and general standard for food contact materials (FCM) in China, applying to all kinds of FCM. The draft proposes changes to the definitions, basic requirements, compliance principles, and product information. This is the first time that a new version has been proposed since its implementation in 2016. More details on Chemlinked.

3. In China, one of the key compliance points for food import is that the food product only contains permitted food additives. In addition to permitted food additives listed in GB 2760, the National Health Commission (NHC) proposes and approves new food additives through separate notifications. On April 24, 2023, CFSA opened three new food additives for public comments. More details on Chemlinked.

4. On April 25, 2023, China NHC opened five new FCM substances for public comments, including three FCM additives with expanded application scope, and two new FCM resins. More details on Chemlinked.